A Call Option on a Stock Has an Exercise Price

question 102

Multiple Choice

A call option on a stock has an exercise price of $14.If the stock price at expiration is $13.50,what is the option payoff for a long call position?

• A)$0.50
• B)$0
• C)-$0.50
• D)$13.50
• E)$14

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Definitions:

Inductive Reasoning

A method of reasoning in which specific observations or measurements are used to make general conclusions.

Normative Economics

A branch of economics that expresses value judgments about economic fairness or what the outcome of the economy or goals of public policy should be.

Economic Reasoning

The process of making decisions based on costs, benefits, and incentives in an effort to maximize benefits while minimizing costs.

Empirical Economics

The branch of economics that focuses on using data and statistical methods to test hypotheses and build economic theories.